Debt-service coverage ratio

(redirected from Debt-Service Coverage Ratios)

Debt-service coverage ratio

Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.

Debt-Service Coverage Ratio

1. In investment real estate, the ratio of annual net operating income on a piece of investment property to its annual debt service. Banks use the DSCR to help determine whether to make or refinance loans for investment property. A DSCR equal to or greater than 1 indicates that the debtor is able to service the debt on the income from the investment property. In personal finance, banks usually require a DSCR of at least 1 to make such a loan, while they generally expect a ratio of 1.2 for commercial projects.

2. In government finance, the ratio of annual export earnings to its annual debt service on external debt.
References in periodicals archive ?
Projected debt-service coverage ratios (DSCRs) are acceptable for the rating category, considering the risk profile of the company, the characteristics of the current PPAs, the intrinsic characteristics of the Panamanian market and the results of sensitivity cases.
The ratings reflect Guacolda's competitive dispatch position supported by the efficiency and geographical location of its units, sound operating and commercial strategies, long-term supply contracts, growing electricity demand in the region, and acceptable projected debt-service coverage ratios (DSCRs) under various stress scenarios.
Short-term rate increases affecting variable-rate debt would only modestly reduce debt-service coverage ratios for rated REITs, which are unlikely to have ratings implications except for those companies whose debt-service coverage ratios are already at the low end of their respective rating category,' said Tara Innes, Managing Director, Fitch Ratings.
market share; -- Minimum debt-service coverage ratios during the capacity and
under sensitivity analysis; -- Minimum forecast base case debt-service coverage ratios of over